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Singapore’s 4th telco bid: OMGTel sounds its war-cry

By Benjamin Cher July 19, 2016

Doubts rival MyRepublic’s claims that it can roll out infra at a quarter the cost

New MVNO Circles.Life not considered a competitor because of its niche nature

TELECOMMUNICATIONS companies are scrambling because the Infocomm Development Authority of Singapore (IDA) is expected to hold a mobile spectrum auction in the third quarter of this year, which would allow the entry of a fourth player to take on incumbents M1, Singtel and StarHub.

One hopeful, MyRepublic, has been a hit by a report in the Today newspaper alleging that it lacked the funds for such a bid, and that its fundraising efforts have been lacklustre.

Meanwhile, its main rival for that auction bid, OMGTel, has been relatively quiet.

While the company, a subsidiary of telecoms equipment provider Consistel, has made public its intention to become the fourth telco, its ambition does not end there, according to chairman and chief executive officer Masoud Bassiri.

“We’re going to start by being fourth, but we are not going to end up being fourth – if we start at fourth and remain fourth, then it wouldn’t really introduce competition,” he told Digital News Asia (DNA) in Singapore.

“No-one is trying to switch positions, none of the three [incumbents] really compete to become first or second – everybody is too content with their position, and their plans and offerings are very similar.

“There is no differentiation except for bundling between the three; and bundling is something that is a dying sale – if you want to bundle up, you should go to a cold climate,” he quipped.

Indeed, OMGTel aims to shake things up, Masoud declared.

“The reason you have bundling is because the prices are too high and you have room to give discounts.

“What happens when the prices normalise, there is no excessive margins to create a bundling advantage, and I believe the prices are extremely high here.

“That leaves room for a price correction, not a price war, to something that’s fair … I believe people in Singapore will pay more for something they value.

“It’s not a price war but a value proposition – that’s our strategy,” he added.

According to local media reports, the three incumbents have said that the introduction of a fourth telco player in the city-state would lead to a price war that would only hurt the market in the long term.

However, the IDA has stuck to its guns, saying that the new spectrum auction would be good for consumers and would allow new types of data-centric services to be rolled out to the market.

OMGTel believes it is a better judge of what is required, based on its experience of being the subsidiary of a telecoms equipment provider.

“I’ve done 50 networks for operators around this region over the past 20 years – we’ve owned networks, sold networks, and integrated networks,” said Masoud (pic).

An amount as low as S$250 million would be barely enough to cover all the indoor spaces in Singapore, according to Masoud.

“S$250 million doesn’t get you there – off the top of my head, the Singapore Sports Hub requires about S$15 million, Suntec City requires S$2 million, Marina Bay Sands requires S$10 million, and Changi Airport requires S$5 million.

“If you add these up, you already have S$32 million right there, and that’s just five buildings,” he argued.

“You have to know the industry very well – we’ve integrated M1 and Singtel networks, and wireless knowledge is not something you get off the textbook, it’s a craft.

“People who don’t know what they’re talking about often get the numbers wrong, and S$250 million is definitely the wrong number – you need more than a billion,” he added.

Of the 1,000 buildings that the incumbents have connected, Consistel has done about 700, according to Masoud, and that is why it is familiar with the numbers and equipment needed.

The average price per building is around S$250,000, and that’s just for a 3G network – a 4G (Fourth Generation) network would be double that.

Masoud said one cannot just plug into existing infrastructure because the signal would degrade, and this would then require retrofitting, which would lead to delays.

“They can’t do 20 buildings per year if they go that route, and they would have to spend money renovating competitors’ networks so they can accommodate a new signal going in,” he said.

While the spectrum block the IDA has allocated for the new market entrant does contain a good chunk of the 900MHz frequency – which hits the sweet spot for indoor penetration – that alone is not good enough for data traffic, according to Masoud.

“900MHz does penetrate more, but it doesn’t provide high-speed data – you have to have a certain signal strength to reach the speed of data you want to offer people,” he said.

OMGTel is also confident of hitting the IDA’s stated 4G quality of service standards, according to Masoud.

“It’s been the criteria for 20 years in Singapore and we’re doing that right now for every telco in the region,” he declared.

“It is easily achievable and it’s part of what we are already doing; we’ve done it at Singapore Sports Hub,” he added.

Competition and focus

While it is keeping an eye on rival MyRepublic, OMGTel was less concerned with the recent entry of mobile virtual network operator (MVNO) Circles.Life.

That is because Masoud does see not it as a competitor due to the very nature of MVNOs.

“We were offered to become an MVNO, but I didn’t like the shackles that go with it,” he said.

“First of all, MVNOs in Singapore are understood to be looking at certain sectors only.

“Second, one of my guys did an analysis – incoming calls are not free. If you do the math, it [Circles.Life plans] comes out more expensive than M1 … it appears cheaper but you’re getting less.

“We don’t go for these kinds of marketing stunts – we want people to know what they are getting,” he added.

When DNA customised a plan on Circles.Life to match the S$30 mySIM plan from M1 with no contract, we found that Circles.Life’s plan would be at least S$6 more just based on the additional talk-time alone.

And Circles.Life was unable to match the 1,000 free SMSes on the M1 plan, as subscribers would only be able to add a maximum of 400 SMSes to their Circles.Life plan.

Key focus and consumers

As for OMGTel’s key focus areas, Masoud was not keen to spill the beans yet, with the fourth telco having two years to launch its service.

“It would be foolish of us to say this is what we can offer at this price, because that would allow the incumbents to just match the price,” he said.

“What we do know is that it’s going to be an infrastructure that will offer more speed and capacity to people,” he added.

But Masoud did let on that while MyRepublic has been focused on the consumer side, OMGTel aims to provide offerings for both enterprises and consumers.

And he had one parting shot, or at least some advice for users: “Unless you see a substantial value proposition, don’t renew your two-year contracts.

“You wait until we’re out there, you’ll be pleasantly surprised with the things we’ll offer – don’t lock yourself up in a two-year contract,” he declared.